The department was looking for five photocopier, high-speed printers to lease for three years
SPEED does matter when you are paying almost R52 million for five high-speed printers.
In a recent Northern Cape High Court judgment, Judge Cecille Williams ruled in favour of the Northern Cape Department of Education when it did not get what it was promised.
The department was looking for five photocopier, high-speed printers to lease for three years.
The required specifications of the machines were set out in detail in the tender invitation and included:
Machine 1 – Complete high volume digital production press (continuous form printing) with a minimum speed of 1 350 A4 impressions/images per minute;
Machine 2 – High speed cut-sheet production printer with a minimum printing speed of 250 ppm A4 and A3 duplex printing, saddle stapled and folded;
Machine 3 – High speed colour cut-sheet production printer with a minimum printing speed of 100 ppm A4 and A3 duplex printing, saddle stapled and folded;
Machine 4 – fully integrated, automated packaging machine; and
Machine 5 – A booklet binding machine.
Carospan (Pty) Ltd and Northern Cape Advanced Wireless (Pty) Ltd, a joint venture, were shortlisted and were invited by the department to do a presentation on functionality on January 18 2017. Carospan and Northern Cape Advanced Wireless (JV) scored the most points whereupon the bid was referred to the bid adjudication committee for further consideration.
According to the court documents, on May 30 2017 the department requested a meeting with the JV where various issues were discussed. Amongst others, the specifications of the machines to be provided by the JV were discussed and agreed upon.
In this regard the JV indicated that a separate booklet binding machine was not necessary as the printing machines had booklet binding capacity. The models for the machinery were agreed upon. Monthly rental was set in an amount of R1 573 200 including VAT. The department also negotiated a discount in the form of three months free rental.
After the meeting of May 30 2017, the department awarded the tender to the JV and on the same day sent a letter to the JV confirming the agreement reached. On May 31 2017 the department sent an official confirmation to the JV of the acceptance of their bid, noting that the total cost of the project was R51 915 600.
Thereafter, further meetings were held between the department and the JV, mainly concerning the logistics for the implementation of the installation of the machines, the signing by the department of a Master Rental Agreement which the JV required to obtain finance for the project, the signing of a Service Level Agreement (the SLA) between the parties, and so forth.
In the meantime and during August 2017 the machines were delivered to the department. It appears that at this stage the machines were only to be stored at the department since the parties had agreed that the rental agreement commence from the beginning of December 2017, since the department’s previous rental agreement would still be in place until the end of November 2017.
Whilst in the process of finalising the SLA, the department’s deputy director – legal services, Ms N Alexander, noticed that the specifications of the machines which had been delivered did not match up with the tender specifications. The department then called a meeting with representatives of the JV, Messer P Wilbers and J Theron, on October 23 2017 to explain the discrepancy.
At this meeting Mr Wilbers, the JV’s sales manager, informed that the specifications of the machines indeed conformed with the specifications, but that the machines were updated versions and their brochures were not available on-line. Mr Wilbers then e-mailed the department a brochure purportedly pertaining to the machines and which showed that the model SPPRO 8220S, which had been supplied, could produce 1350 copies per minute.”
The SLA was concluded between the parties on November 20 2017 and the machines were installed by the JV during December 2017.
After installation the department discovered that not one of the machines could produce more than 136 images per minute while the bid specification for the high volume digital production press was for a minimum of 1 350 images per minute. The department identified other problems with the machines as well (relating to colour, binding and other capabilities).
The department then called a meeting with the JV on January 26 2018. The JV was represented at this meeting by Mr A Killian, the JV’s operational director.
Mr Killian admitted that the product the JV had supplied was not according to the specifications and that their sales manager, Mr Wilbers, had “gone rogue” by manipulating the brochures to conform with the bid specifications. Mr Killian was very apologetic and asked for an opportunity to scrutinise the specifications and present an alternative plan on January 29 2018.
The department stressed the fact the JV had misrepresented the capabilities of the machines and that the department would have to cancel the contract. Nevertheless, the JV was given the opportunity to remedy the problem.
On January 29 2018, Mr Killian presented as an alternative, and to increase productivity, the use of additional machines at the same rental but that the rental period be extended to cover the costs of the extra machines.
The JV’s suggestion was not acceptable to the department and Mr Killian was informed of the cancellation of the contract. On February 7 2018 the department cancelled the contract in writing due to misrepresentation which induced the contract.
The JV refused to accept the cancellation and on February 13 2018 tendered to provide the department with a Ricoh V20100 Roll Feed Production Printer in the place of two of the machines, which they allege would comply in all aspects with the bid specifications. The department rejected the proposal and requested that the JV remove the offending machines before February 23 2018.
The JV approached the high court, requesting that the department be interdicted and restrained from repudiating the agreement reached.
The JV contended that the cancellation of the contract by the department was unlawful, given the terms of the SLA. They argued that since the department did not give the JV written notice to remedy its breach, the cancellation by the department of the agreement is unlawful and the agreement was still extant.
The JV contended in its founding affidavits to court that when it submitted its bid, it had appended a brochure of the machines it proposed. This brochure specifically stated that the machines proposed could generate 95, 110 and 135 impressions/images per minute. Despite the capabilities of the proposed machines being well below the bid specification, the JV was shortlisted. The JV was then invited to the functionality meeting of January 19 2017 where the specifications were discussed and the brochures were explained. During the second functionality meeting of May 11 all the aspects of the first meeting were repeated. These presentations led to the meeting of May 30 2017 where inter alia the models and specifications of the machines were agreed upon pursuant whereto the JV was awarded the tender.
The department, however, denied that the JV had submitted any brochures with its bid documents and stated that the JV first introduced brochures/material when it did powerpoint presentations at the functionality meetings.
Judge Williams pointed out that the first problem she had was with the material used at the functionality presentations as it was not the brochure which the applicant alleged to have used at these meetings.
“This material has obviously been prepared by the presenter for the powerpoint presentation and is not a brochure.
“Secondly, the JV’s denial of the material relating to the machine which can print 1 375 images per minute being used at these presentation, raises more questions than answers. If it had not been used and the JV had used only material relating to the machines which could produce 95, 110 and 135 images per minute, why would the department have agreed to these specifications so disparate from the bid specifications? Why the concern by the department when the delivered machines, even before installation and usage, did not appear to be in accordance with the bid specifications? Why then did Mr Wilbers find it necessary to tamper with the brochures to reflect compliance with the bid specifications if it was never so represented by the JV?”
She stated that in her view, the “probabilities by far favour the version of the department, that misrepresentation induced the contract”.
“That the misrepresentation went to the root of the contract entitling them to resile from the contract without having to comply with the requirements of the SLA.”
Judge Williams dismissed the application by the JV with costs.